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Chancellor Rachel Reeves has vigorously defended the recent £40 billion tax hike outlined in the autumn budget, asserting that the increase is essential as businesses prepare for its impact. She argues that without these measures, waiting lists in the NHS would be even longer than they currently are.
Starting April 6, employers will face a £25 billion spike in national insurance contributions (NICs), coinciding with rising costs for consumers, including hikes in utility bills and car taxes.
In response to inquiries from Members of Parliament, Reeves stated, “We raised national insurance contributions and injected an additional £25 billion into our NHS. We believe that prioritizing the NHS is the right course of action.”
Reeves emphasized that had she opted against tax increases, the implications would have been dire, resulting in “increased NHS hospital waiting lists,” a challenge that has seen some improvement over the past five months.
When Conservative MP Harriett Baldwin questioned her policies, Reeves acknowledged differing opinions on NHS funding but highlighted the necessity of supporting tax structures to finance these expenditures. “Some may argue against allocating more funds to the NHS, and they are entitled to their views…however, one must be honest; if you desire additional resources, support for the taxes that fund them is essential,” she added.
A recent report from the Resolution Foundation indicates that the average household will face a £400 decline in disposable income in the upcoming tax year due to the tax increases and general cost increases, including the freezing of income tax thresholds that push more individuals into higher tax brackets.
Adam Corlett, a principal economist at the think tank, noted, “As the new tax year commences, households will encounter higher taxes and significant rises in bills, with benefits lagging behind the surge in living costs.”
The Resolution Foundation has urged the government to expedite a planned 2% rise in the basic universal credit payment by six months to alleviate financial pressure on families.
Meanwhile, business groups have raised alarms about potential job losses stemming from the NICs increase that coincides with a 6.7% uptick in the national living wage for employees aged 21 and over.
Despite these warnings, the Chancellor indicated that currently available labour market data does not suggest any major decline in employment. She reported, “We closely monitor labour market statistics. Presently, they indicate that wage growth is surpassing inflation by a factor of two, and vacancies remain stable at a high level, suggesting businesses are still inclined to hire.”
As she faced scrutiny regarding her recent spring statement, Reeves underscored the significance of revisions made to the government’s fiscal regulations, which now permit a greater level of investment than was anticipated under her predecessor, Jeremy Hunt.
She concluded, “The most profound long-term change we’ve implemented thus far is the facilitation and preservation of capital spending.”
Source
www.theguardian.com